Many legislators said during a National Assembly session early this week that the latest growth estimate of 6.7 percent, though exceeding the original target, would not mean anything when inflation is high.

Rising consumer prices have created many difficulties for low incomers and people living on pensions, they said.

The government needs to take stronger measures to control inflation because many efforts so far have not proved effective, they said.

Vu Quang Hai, a representative of the northern province of Hung Yen, said inflation has surged quickly and can rise close to double digit levels at the end of the year.

“Economic growth, if not accompanied by higher living standards, is low quality growth,” he said.

According to a recent report by the National Assembly’s Economic Committee, the economy is still facing many uncertainties.

There are worrying signs with monetary policies and the country’s trade balance. Trade deficit, a recurring problem for many years, has reduced foreign currency reserves and put more downward pressure on the dong, the report says.

High, unsteady consumer prices have troubled businesses and affected public confidence, it said. Tightened monetary policies in the first months of the year caused credit growth to slow and interest rates to rise. Meanwhile, the gold and forex markets saw complicated movements and foreign currencies were used widely in the country. Public debt is on the rise, set to hit 56.7 percent of gross domestic product this year.

“These factors, combined together, show that the national economy is not really stable,” Ha Van Hien, chairman of the Economic Committee, said in an interview with the Vietnam Economic Times.

Hien said Vietnam is unlikely to keep annual inflation at 8 percent this year, given that the consumer price index by the end of October was up 7.58 percent over last December’s figure.

Trade deficit

Vietnam’s trade deficit this year will be US$12 billion, Minister of Industry and Trade Vu Huy Hoang told the National Assembly on Monday, revising down an earlier estimate of $13.5 billion.

“Narrowing the trade gap is a long term process that cannot be finished in a day or two, especially when we are investing a lot in the economy and building production capacities for coming years,” he said.

Economist Tran Du Lich, a deputy of Ho Chi Minh City, said trade deficit and inflation are the two main factors that will affect the country’s economy, not just this year but for several years to come. The country is now finding it hard to keep its currency stable, he noted.

He said the government needs to narrow the trade gap, control inflation and cut public spending next year to stabilize the economy.

Deputy Nguyen Ngoc Hoa from HCMC said due to the heavy reliance on imported materials, Vietnam can export a lot but actually it is just helping other countries sell their products. Up to 80 percent of the material used to make export products came from other countries, Hoa said.

This is because Vietnam did not focus on developing supporting industries to add more value to its own products, Hoa said.

The government has targeted an economic growth of 7.5 percent next year while aiming to keep inflation at around 7 percent.